Insurer Hikes FFS Pay, Providers Notch Savings

Premera Blue Cross, a Washington State-based insurer, has reduced its healthcare costs by increasing the fee-for-service reimbursements it pays to some of its physicians. Participating physicians can increase their FFS payments on an annual basis by reducing the cost of care for their attributed Premera patients compared to all of the Premera members in a geographic area. The savings are calculated each year so bumps in reimbursements are on a year-to-year basis.

"FFS is simply the vehicle to pass back savings based on overall healthcare costs," explains Rich Maturi, senior vice president of healthcare delivery at Premera.

What Premera calls its global outcomes contracting model doesn't focus on certain diseases or conditions, nor does it prescribe goals and incentives. Instead, physicians manage the care of an attributed group of Premera patients whose health status can range from very healthy to suffering from multiple chronic diseases.

The idea is for physicians to take more responsibility for the overall healthcare costs and the quality of care. "But they have flexibility to decide how they want to achieve the savings," says Maturi.